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The U.S. Federal Reserve published the minutes from its latest policy meeting at April 30 – May 1, which showed unanimity on the need to maintain the current pace of purchases until more economic progress in shown, however a “number” of members called for an exit as early as June.
Many of the members favored beginning a tapering of QE as early as June, but the committee as a whole decided more progress on the economy is needed first. A few participants expressed concern inflation is under target and say future price developments must be carefully watched. One member wanted to boost asset purchases, while one wanted tapering to begin immediately.
Members generally agreed on need for FOMC to communicate clearly that pace/size of purchases would depend on outlook for labor market and jobs, ...
European stocks rose to a new five-year high on Wednesday, backed up by Federal Reserve Chairman Ben Bernanke’s statement that the Fed would retain its monetary stimulus until the economic improves.
The Stoxx Europe 600 Index added around 0.2 percent to 310.59 today. The equity benchmark closed at the highest level since June 2008 yesterday. The gauge has rallied 96 percent since March 2009 as European Central Bank President Mario Draghi pledged to preserve the euro and the Fed embarked on three rounds of stimulus.
STOXX 600 ended higher today by 0.19% at 310.59; STOXX 50 ended also in green, higher by 0.47% at 2835.01.
CAC 40 Index
The French benchmark index ended in the green today to settle at 4051.11, higher by 14.93 points or 0.37%. The index opened at 4035.43 recording a high ...
U.S. Existing Home Sales in April Rise to Highest Level Since November 2009
- Existing home sales in the US rose to 4.97 million annualized units in April 2013 from March’s revised 4.94 million sales (initially reported as 4.92 million). Market expectations had been for sales of 4.99 million annualized units.
- The inventory of homes available for sale jumped by 11.9% to a seven-month high of 2.16 million units. The month’s supply of unsold homes rose to 5.2 from 4.7 in the previous month, but this is still well below the historical average of 6.4 months and indicative of tight supply conditions in the resale market.
- The median price of existing homes increased to 11.0% on a year-over-year basis as the share of distressed property sales declined from a year ago.
An ...
Federal Reserve Chairman Ben S. Bernanke said that a premature exit for the Fed’s stimulus risks endangering or slowing down recovery, as the current monetary stance is providing significant benefits to the economy, with the job market yet to fully recover.
Bernanke speaks before the Joint Economic Committee of the Congress in Washington today in a prepared testimony.
“A premature tightening of monetary policy could lead interest rates to rise temporarily but would also carry a substantial risk of slowing or ending the economic recovery and causing inflation to fall further.” He said.
The Chairman added that the monetary policy is providing “significant benefits.”
Bernanke said the U.S. economy is still greatly affected by government spending cuts and high unemployment rates, which has ...
- There were no major surprises in connection with today's Bank of Japan (BoJ) meeting and the market impact should be neutral. The expansion of the monetary base (now the main policy instrument) was maintained at JPY60- 70trn. In addition BoJ as expected upgraded its view of the economy and now believes that the economy has started to recover.
- Interestingly enough there was no mention of bond yields in the statement, suggesting that BoJ does not regard the recent increase in government bond yields a major problem. Rightly so in our view, as the increase in bond yields has been more than offset by higher inflation expectations. However, inflation expectations remain substantially below the 2% targeted by BoJ and hence the increase in bond yields cannot so far justify a scaling down of ...
The International Monetary Fund urged UK on Wednesday to ease back on its austerity program “to avoid inflicting long-term damage on the nation`s growth prospects”.
The austerity program that UK’s government launched in 2010 was part of the George Osborne’s ambition to correct the country`s public finances.
However, UK’s economic growth continued to weaken, and the IMF warned that an extended period without growth could do lasting damage.
According to the IMF, businesses lacking the confidence to invest and make the economy more productive and capable of raising exports, is damaging.
“The key risk is that persistent slow growth could permanently damage medium-term growth prospects”, the IMF said.
“After five years of relatively weak activity, additional measures are needed to raise ...
The Japanese yen dropped to a three-year low against the euro after Bank of Japan (BOJ) policy makers affirmed a plan to double the monetary base over two years and their statement made no reference to rising bond yields.
Board members of the BOJ decided during keep the nation’s interest rate unchanged for another round between zero and 0.10% to spur the world’s third largest economic growth, to ultimately meet the long-sought 2% inflation.
Japan`s Prime Minister Shinzo Abe pledged to reach the nation’s 2% inflation target within two years as he called for unlimited easing plans, which boosted Japanese economy during the previous period.
Japan’s currency declined after report showed the trade deficit swelled more in April than economists forecast and exports were lower than estimated. ...
Title:
GBP Gets A Pounding
GBP Gets A Pounding
It's been a rough morning for GBP, with economic data thwarting early attempts at a GBP recovery. BOE minutes, retail sales and public sector data all weighed on the pound, pushing it below 1.5100 – a key support level. Data details:
- BOE minutes were as expected: 6-3 vote to keep QE on hold. This reinforces he view that the BOE is practically in limbo until Mark Carney takes the helm in July.
- Retail sales ex auto fuel fell 1.4% in April; the main downward pressure came from a decline in food sales, which fell 3.8% from a year earlier.
- Cold weather was blamed for poor sales, particularly bbq food and garden furniture.
- Online retail sales were strong, and now make up a tenth of all sales.
- Public sector finances for April: this was important ...
European Market Update
UK retail sales data comes in negative and well expectations; markets ahead Bernanke testimony for hints of QE tapering
Notes/Observations
Bank of Japan (BoJ) leaves policy unchanged (as expected). Upgrades economic outlook for 5th straight month
Japan Apr trade deficit worse than expected but smallest deficit in three months
Australia consumer confidence sees biggest drop in 17 months
USD corrects from recent strength as markets might have gotten ahead of itself on the debate over tapering of QE
UK retail sales come in negative and below expectations; cold weather blamed
Economic Data
(HU) Hungary Mar Avg Gross Wages Y/Y: 3.2% v 3.0%e
(DK) Denmark May Consumer Confidence: -2.6 v -2.5e
(EU) ECB: €206M borrowed in overnight loan facility vs. €190M prior; € ...